Where Dubai rents have risen and fallen, Q2 2019


Ian Oxborrow
  • English
  • Arabic

What was the general market movement in Q2?

Rental rates continued to soften in the second quarter of the year, across both the apartment and villa segments.

Property services company Asteco reported a fall of 4 per cent during the quarter for apartments and 2 per cent for villas with annual declines around the 10 per cent mark.

Chestertons meanwhile reported a deeper decline of 5 per cent for apartments and 8 per cent for villas.

Consultancy Cavendish Maxwell said apartment rents were down 12.5 per cent year-on-year and villas 12.6 per cent.

The downward pressure was as a result of additional supply coming to the market, and the expectation is for more declines throughout the year and into the first quarter of next.

What else did the property companies have to say?

The bottom line: it continues to be a tenant's market with opportunities aplenty for those seeking a move or just arriving.

Landlords are offering lower rates to existing tenants and rent-free periods of up to three months, while others are offering multiple rent cheques, shorter leases and a waiver of security deposits.

"Whether tenants want to upgrade, downsize, or remain in their current property, the ongoing downward correction in Dubai’s rental market is providing leverage for them to get the best possible deal," said Chestertons.

It added that the largest rent reductions are likely in in locations such as Jumeirah Village Circle, Business Bay and Dubailand as this is where the most significant supply is arriving.

Asteco said vacancy rates are on the rise in the older properties as affordable villa communities such as Damac's Akoya and Nshama Town Square have come on the market.

How does the supply situation look for the rest of the year?

There was plenty in the second quarter, and there's plenty more to come.

The handover of 5,250 apartments took place between April and June, according to Asteco, plus 1,300 villas. The majority of this was located at Dubai Creek Harbour, Dubai Hills Estate and Dubai Marina where new stock included Sparkle Towers and The Residences at Marina Gate.

It projects a further 12,000 apartments in the second half of the year, along with 5,000 villas.

Chestertons said more than 20,000 new units were delivered in 2018 and "the projections for the remainder of 2019 are significantly higher".

A total of 20,978 residential units were completed in the first half of 2019, according to Property Finder estimates. An additional 38,426 residential units within 152 projects that have at least an 85 per cent completion status as of July, are scheduled to be delivered by the end of the year, it said.

New projects on the way include Arabella villas, Seventh Heaven in Al Barari, Acacia apartments in Park Heights within Dubai Hills Estate, townhouses and apartments in Town Square, Phase 1 and 2 of Azizi Victoria,Wind Tower 1 and 2 in Jumeirah Lakes Towers and three new towers in Al Habtoor City.

Anything else of note?

Yes, this whole rental situation could see big changes in the near future. The Dubai Land Department announced in May that it is studying a proposal to freeze rents for three years after landlords and tenants sign a contract.

"The new rental law and the three-year contract that the Land Department is drafting is being studied by the relevant departments," a DLD spokesperson said. "The new law will be formally issued in the near future."

More recently, Dubai announced the formation of a higher committee for real estate that aims to achieve a balance between supply and demand in the sector.

"In the next phase, we need [to pitch] quality projects, exceptional ideas to boost our economy," said Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai in an open letter on September 6.

"Real estate projects need to control their pace to bring added value to the national economy so as not to become a burden and a source of imbalance in our economic process."

In light of the rental declines during the past couple of years, Dubai has been named one of the top cities in the world for how many square metres of prime property can be bought for $1 million.

Some of Darwish's last words

"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008

His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.

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If you go:
The flights: Etihad, Emirates, British Airways and Virgin all fly from the UAE to London from Dh2,700 return, including taxes
The tours: The Tour for Muggles usually runs several times a day, lasts about two-and-a-half hours and costs £14 (Dh67)
Harry Potter and the Cursed Child is on now at the Palace Theatre. Tickets need booking significantly in advance
Entrance to the Harry Potter exhibition at the House of MinaLima is free
The hotel: The grand, 1909-built Strand Palace Hotel is in a handy location near the Theatre District and several of the key Harry Potter filming and inspiration sites. The family rooms are spacious, with sofa beds that can accommodate children, and wooden shutters that keep out the light at night. Rooms cost from £170 (Dh808).

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Our legal advisor

Ahmad El Sayed is Senior Associate at Charles Russell Speechlys, a law firm headquartered in London with offices in the UK, Europe, the Middle East and Hong Kong.

Experience: Commercial litigator who has assisted clients with overseas judgments before UAE courts. His specialties are cases related to banking, real estate, shareholder disputes, company liquidations and criminal matters as well as employment related litigation. 

Education: Sagesse University, Beirut, Lebanon, in 2005.

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Financial considerations before buying a property

Buyers should try to pay as much in cash as possible for a property, limiting the mortgage value to as little as they can afford. This means they not only pay less in interest but their monthly costs are also reduced. Ideally, the monthly mortgage payment should not exceed 20 per cent of the purchaser’s total household income, says Carol Glynn, founder of Conscious Finance Coaching.

“If it’s a rental property, plan for the property to have periods when it does not have a tenant. Ensure you have enough cash set aside to pay the mortgage and other costs during these periods, ideally at least six months,” she says. 

Also, shop around for the best mortgage interest rate. Understand the terms and conditions, especially what happens after any introductory periods, Ms Glynn adds.

Using a good mortgage broker is worth the investment to obtain the best rate available for a buyer’s needs and circumstances. A good mortgage broker will help the buyer understand the terms and conditions of the mortgage and make the purchasing process efficient and easier. 

Barings Bank

 Barings, one of Britain’s oldest investment banks, was
founded in 1762 and operated for 233 years before it went bust after a trading
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losses caused by rogue trader Nick Lesson. 

Leeson gambled more than $1 billion in speculative trades,
wiping out the venerable merchant bank’s cash reserves.  

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